Valuation discipline key as markets navigate tariff noise: Manishi Raychaudhuri

Renewed volatility around global trade policy is forcing investors to reassess their strategies as tariff levels settle near 15% but policy signals remain fluid. Speaking to ET Now, market strategist Manishi Raychaudhuri said the sheer volume of conflicting headlines has made it difficult to draw firm conclusions, noting that what once appeared to be a settled tariff environment has “come back with a bang,” and that India’s earlier advantage over ASEAN peers has largely disappeared, creating “chaos and uncertainty” in the near term.

Against this backdrop, Raychaudhuri emphasized focusing on domestic growth opportunities rather than export-oriented sectors. He said he would avoid jumping into exporters and instead look for areas where growth aligns with reasonable valuations, highlighting basic materials, select industrials, and consumer discretionary segments as pockets of opportunity — while stressing the need to remain selective. Stocks such as Tata Steel, Hindustan Zinc, and Larsen & Toubro reflect the domestic cyclical themes he prefers.

He flagged consumer staples and IT services as areas of caution, arguing that staples suffer from low growth despite elevated valuations and that IT faces pricing pressure as artificial intelligence changes how clients evaluate contracts, potentially compressing margins. According to him, IT stocks may only become attractive at valuations closer to 10–12 times earnings, implying either downside or a prolonged period of sideways performance.

While acknowledging that some technology firms could stand out, he said companies demonstrating a clear ability to reinvent themselves — including through partnerships such as Infosys’ collaboration with AI players — may become more interesting over time, though he would wait for clearer evidence in growth or margin trends before allocating capital.

On foreign flows, Raychaudhuri noted that global investors currently have compelling alternatives across Asia where earnings growth is stronger and valuations are lower, suggesting that until this gap narrows, it may be difficult for India to see a sustained return of foreign institutional buying.